Stronghold Launches First Venture-Backed USD Token on Stellar Network

IBM to Explore Uses of Stronghold USD on the IBM Blockchain Platform

July 17, 2018 07:00 AM Eastern Daylight Time

SAN FRANCISCO--(BUSINESS WIRE)--Stronghold, a financial institution building an asset-agnostic global
payment and trade ecosystem, today announced the first and only
venture-backed USD Anchor on the Stellar Network, an open-source
protocol for value exchange. The ‘Stronghold USD’ token is asset-backed
(at one-to-one U.S. dollars per coin) with reserves held by a
state-chartered trust company. Stronghold, which
recently raised seed funding from Freestyle Capital, will use
Stellar’s blockchain protocol to issue and transact Stronghold USD while
providing access to liquidity through its institutional exchange
services and the custodial relationship with its partnered trust company.

Stronghold also announced a new collaboration with IBM
to explore uses for Stronghold USD within blockchain business networks
on the IBM
Blockchain Platform. The aim is to experiment with ways for
financial institutions and other organizations to achieve faster, safer
and more efficient transaction processing and money transfer throughout
the world’s economy.

The effective use of an asset-backed token (with reserves held at a
regulated, state-chartered trust company), like Stronghold USD, can act
as a new liquidity tool for real-time foreign exchange and international
settlement, as well as enable banks to issue credit into transactional
networks and trade ecosystems. The unique attributes of such tokens
harness the promise of cryptocurrencies, while also limiting price
volatility, adhering to the rigors and integrity of sound monetary
policy, and providing support for industries that have regulatory
compliance requirements.

“The process for seamlessly managing and trading assets of any form from
digital to traditional currencies, needs to evolve as financial
institutions are seeking ways to break into new asset classes like
cryptocurrencies,” said Stronghold’s co-founder and CTO, Sean Bennett.
“Asset-backed tokens can provide seamless access to all currencies,
improving the global movement of money. We’re honored to work with IBM
to explore new ways to use Stronghold USD within.”

“The digitization of real-world assets using blockchain can dramatically
transform many forms of financial transactions conducted around the
world,” said Jesse Lund, global vice president of IBM Blockchain. “New
types of fiat-backed instruments, like Stronghold’s USD token, have the
potential to improve the backbone of international banking operations
and payments, giving banks an easier way to integrate with public
blockchain networks without significant changes to their core banking
and compliance infrastructure.”

The Stronghold USD token is another example, similar to digital tokens
or digital coins, of the new financial instruments being developed to
transform the way in which money moves. They are designed to represent
ownership of real-world assets and can be electronically exchanged
directly between counterparties, resulting in immediate ownership
transfer of the underlying assets themselves — a process called
settlement. The value of stable tokens is pegged to liquid or stable
asset classes. In the case of Stronghold USD, the asset is U.S. dollar
reserves held in custody by a state-chartered trust company.

The intent of issuing a token, like Stronghold USD, is to strengthen
confidence in the practical application of stable coins for routine
transactions by addressing the challenges associated with previous
attempts at fiat-backed coins, where limited transparency into the
underlying reserves guaranteeing the coin’s value prevented broad
adoption.

Since federally-insured cash deposits back Stronghold USD, it is not
subject to the price volatility of a pure cryptocurrency like Bitcoin or
Ether. Stronghold USD still provides the benefits of secure, immediate
exchangeability, anywhere, anytime, with low transaction costs and fewer
intermediaries than traditional bank transfers. This makes Stronghold
USD practical for everyday transactions, large value payments and
international wire transfers. Stronghold USD are pre-approved tokens
that are solely designed as a B2B solution for financial institutions,
multinational corporations, and asset managers. At this time, the tokens
are not available for retail customers but may be available in the
coming months. Using Stellar’s hyper-advanced blockchain protocol,
Stronghold’s platform can support digital assets and efficiently
scale-up to multiple fiat currencies.

IBM’s exploration of Stronghold USD builds upon its advances in both
public and private blockchain networks designed to enable clients and
developers to engage in token-powered networks. IBM is working with
banks and non-bank financial institutions to apply blockchain to
modernize the multi-trillion-dollar industry of cross-border payments
and correspondent banking. As part of those efforts, IBM is exploring
ways to integrate tokens, like Stronghold USD, as settlement instruments
within the networks it is developing and delivering to its clients on
the IBM Blockchain Platform, particularly those requiring real-time
international payments.

About Stronghold

Co-founded in 2017 by CEO Tammy Camp and CTO Sean Bennett,Stronghold
is a financial institution building an asset-agnostic global payment and
trade ecosystem. With over 20,000 traders, Stronghold’s cryptocurrency
trading platform is built on the Stellar network. Users can currently
send, receive and trade Bitcoin, Ethereum and Lumens. USD payment and
trading are available for institutions. Stronghold is the first and only
trading platform and crypto exchange built on the Stellar network that
settles in USD. For more information, visit https://stronghold.co/.

About IBM

IBM is the leader in open-source blockchain solutions built for the
enterprise. As an early member of Hyperledger and active contributor to
the Hyperledger Fabric and Stellar blockchain projects, IBM is dedicated
to advance cross-industry blockchain technologies supporting the
development of openly-governed transactional business networks. IBM has
worked with more than 400 clients across financial services, supply
chains, IoT, risk management, digital rights management and healthcare
to implement blockchain applications. For more information about IBM
Blockchain, visit https://www.ibm.com/blockchain/.

Statements regarding IBM’s future direction and intent are subject to
change or withdrawal without notice and represent goals and objectives
only.